COMPOSITE SUPPLY VS WORKS CONTRACT

[NAMAN DOKANIA]

Sir,

A Private Limited Company entered into a contract with Railway to under take an activity amounting to Rs. (say) 20 Crores which content the following:

1. Supply of ballast (Stone)and spreading the same under the tracks /- Rs. 8 Crores

2. Transportation of Ballast from Factory to railway track point : Rs. 5 crores

3. Linking of railway tracks by tracks being provided by railways :- 7 crores

Will the service be a composite supply taxable @5% being ballast being a principal supply or a works contract service @18%.

Please state the reasoning as well. Any further info is most welcomed sire/madame.

P.s. Tax rate on ballast is 5%

AI Summary

Dispute Over Tax Rate: Are Railway Project Services a Composite Supply at 5% or Separate Services at Higher Rates? A Private Limited Company contracted with the Railway for a project worth Rs. 20 Crores, involving the supply and spreading of ballast, transportation of ballast, and linking railway tracks. The query concerns whether this constitutes a composite supply taxable at 5% or a works contract service taxable at 18%. One response indicated that each service should be taxed separately, referencing a Board's Flyer that classifies works contracts as supply of services with specific tax rates. Another response suggested that the first two activities could be a composite supply, while the third might be job work taxable at 12%.